SALES CASE DIGEST SALES CASE DIGEST A. BASIC CONCEPT A. BASIC CONCEPT
I. DEFINITION OF CONTRACT I. DEFINITION OF CONTRACT
Acap v. CA [G.R. No. 118114.December 7, 1995.] Acap v. CA [G.R. No. 118114.December 7, 1995.] First Division, Padilla (J): 4 concur
First Division, Padilla (J): 4 concur
Facts:
Facts: The title to Lot 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT R-12179. TheThe title to Lot 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT R-12179. The lot has an area of13,720 sq. m. The title was issued and is registered in the name of spouses Santiago Vasquez and lot has an area of13,720 sq. m. The title was issued and is registered in the name of spouses Santiago Vasquez and Lorenza Oruma. After both spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto executed a duly Lorenza Oruma. After both spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto executed a duly notarized document entitled “Declaration of Heirship and Deed of Absolute Sale” in favor of Cosme Pido. Since 1960, notarized document entitled “Declaration of Heirship and Deed of Absolute Sale” in favor of Cosme Pido. Since 1960, Teodoro
Teodoro Acap Acap hadbeen hadbeen the the tenant tenant of of a a portion portion of of the the said said land, land, covering covering an an area area of of 9,5009,500sq. sq. m. m. When When ownership ownership waswas transferred in 1975 by Felixberto to CosmePido, Acap continued to be the registered tenant thereof and religiouslypaid his transferred in 1975 by Felixberto to CosmePido, Acap continued to be the registered tenant thereof and religiouslypaid his leasehold rentals to Pido and thereafter, upon Pido’s death, to his widow Laurenciana. The controversy began when Pido leasehold rentals to Pido and thereafter, upon Pido’s death, to his widow Laurenciana. The controversy began when Pido died interstate and on
died interstate and on 27 November 1981, his survivi27 November 1981, his surviving heirs executed a ng heirs executed a notarized document denominated as “Declarationnotarized document denominated as “Declaration of
of HeirHeirship andWaiship andWaiver of ver of RighRights ts of Lot of Lot 1131130 0 HiniHinigaragaran n CadCadastrastre,” e,” wherwherein they ein they decldeclared to ared to havhave e adjuadjudicadicated ted uponupon themselves the parcel of land in equal share, and that they waive, quitclaim all right, interests and participation over the themselves the parcel of land in equal share, and that they waive, quitclaim all right, interests and participation over the parcel of land in favor of Edy de los Reyes. The document was signed by all of Pido’s heirs. Edy de los Reyes did not sign parcel of land in favor of Edy de los Reyes. The document was signed by all of Pido’s heirs. Edy de los Reyes did not sign said document. It will be noted that at the time of Cosme Pido’s death, title to the property continued to be registered in said document. It will be noted that at the time of Cosme Pido’s death, title to the property continued to be registered in the name of the Vasquezspouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in his favor, de los the name of the Vasquezspouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in his favor, de los Reyes filed the same with the Registry ofDeeds as part of a notice of an adverse claim against the original certificate of Reyes filed the same with the Registry ofDeeds as part of a notice of an adverse claim against the original certificate of title.
title.
Thereafter, delos Reyes sought
Thereafter, delos Reyes sought for Acap to for Acap to personally inform him that he personally inform him that he had become the had become the new owner of new owner of the land the land and thatand that the lease rent
the lease rentals therals thereon eon shoshould be uld be paipaid d to to himhim. . DeDelos Reyelos Reyes s alallegleged ed thathat t he he and Acap and Acap enentertered ed intinto o an an oraoral l lealeasese agreement wherein Acap agreed to
agreement wherein Acap agreed to pay 10cavans of palay per annum as pay 10cavans of palay per annum as lease rental. In 1982, Acap allegedlycomplied withlease rental. In 1982, Acap allegedlycomplied with said obligation. In 1983, however, Acap refu
said obligation. In 1983, however, Acap refused to pay any further lease rentals on the land, sed to pay any further lease rentals on the land, prompting delos Reyes to seekprompting delos Reyes to seek theassistance of the then Ministry of Agrarian Reform (MAR) in Hinigaran,Negros Occidental. The MAR invited Acap, who theassistance of the then Ministry of Agrarian Reform (MAR) in Hinigaran,Negros Occidental. The MAR invited Acap, who sent his wife, to a conference scheduled on 13 October 1983. The wife stated that the sheand her husband did not sent his wife, to a conference scheduled on 13 October 1983. The wife stated that the sheand her husband did not recognize delos Reyes’s claim of ownership over the land. On 28 April 1988, after the lapse of four (4) years, delosReys recognize delos Reyes’s claim of ownership over the land. On 28 April 1988, after the lapse of four (4) years, delosReys field a complaint for recovery of possession and damages against Acap, alleging that as his leasehold tenant, Acap refused field a complaint for recovery of possession and damages against Acap, alleging that as his leasehold tenant, Acap refused and failed to pay the agreed annual rental of 10 cavans of palay despite repeated demands. On 20 August 1991, the lower and failed to pay the agreed annual rental of 10 cavans of palay despite repeated demands. On 20 August 1991, the lower court rendered a decision in favor of delos Reyes, ordering the forfeiture of Acap’s preferred right of a Certificate of Land court rendered a decision in favor of delos Reyes, ordering the forfeiture of Acap’s preferred right of a Certificate of Land Transfer
Transfer under under PD PD 27 27 and and his his farm farm holdings, holdings, there there turn turn of of the the farmland farmland in in Acap’s Acap’s possession possession to to delos delos Reyes, Reyes, and and AcapAcap topay P5,000.00 as attorney’s fees, the sum
topay P5,000.00 as attorney’s fees, the sum of P1,000.00 as expenses of litigation and the of P1,000.00 as expenses of litigation and the amount of P10,000.00 as actualamount of P10,000.00 as actual damages.
damages.
Aggrieved, petitioner appealed to the Court of Appeals. Subsequently, the CA affirmed the lower court’s decision, holding Aggrieved, petitioner appealed to the Court of Appeals. Subsequently, the CA affirmed the lower court’s decision, holding that de los Reyes
that de los Reyes had acquired ownership of Lot No. 1130 of the had acquired ownership of Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental based onCadastral Survey of Hinigaran, Negros Occidental based on a document entitled “Declaration of Heirship and Waiver of Rights”, and ordering the dispossession of Acap as leasehold a document entitled “Declaration of Heirship and Waiver of Rights”, and ordering the dispossession of Acap as leasehold tenant of the land
tenant of the land for failure to pay rentals. Hence, the petition for for failure to pay rentals. Hence, the petition for review on certiorarireview on certiorari.. The Supreme
The Supreme Court granted the Court granted the petition, set aside petition, set aside the decision of the decision of the RTC the RTC Negros Occidental, dismissed the Negros Occidental, dismissed the complaint forcomplaint for recovery of possession and damages against Acap for failure to properly state a cause of action, without prejudice to recovery of possession and damages against Acap for failure to properly state a cause of action, without prejudice to private respondent taking theproper legal steps to establish the legal mode by
private respondent taking theproper legal steps to establish the legal mode by which he claims to have acquired ownershipwhich he claims to have acquired ownership of the land in
of the land in question.question.
1. Asserted right or claim to ownership not
1. Asserted right or claim to ownership not sufficient per se to give rise to ownership over the sufficient per se to give rise to ownership over the resres
An asserted right or claim to ownership or a real right over a thing arising from a juridical act, however justified, is not per An asserted right or claim to ownership or a real right over a thing arising from a juridical act, however justified, is not per se sufficient to give rise to ownership over the res. That right or title must be completed by fulfilling certain conditions se sufficient to give rise to ownership over the res. That right or title must be completed by fulfilling certain conditions imposed by law. Hence, ownership and real rights are acquired only pursuant to a legal mode or process. While title is the imposed by law. Hence, ownership and real rights are acquired only pursuant to a legal mode or process. While title is the juridical just
juridical justification, mode is the actification, mode is the actual process of acquisual process of acquisition transfer of owition transfer of ownership over a thing in questnership over a thing in question.ion. 2. Classes of modes
2. Classes of modes of acquiring ownershipof acquiring ownership
Under Article 712 of the Civil Code, the modes of acquiring ownershipare generally classified into two (2) classes, namely, Under Article 712 of the Civil Code, the modes of acquiring ownershipare generally classified into two (2) classes, namely, the original mode(i.e, through occupation, acquisitive prescription, law or intellectualcreation) and the derivative mode the original mode(i.e, through occupation, acquisitive prescription, law or intellectualcreation) and the derivative mode (i.e., through succession mortis causaor tradition as
(i.e., through succession mortis causaor tradition as a result of certain contracts, a result of certain contracts, such as sale, barter,donation, assignmentsuch as sale, barter,donation, assignment or mutuum).
or mutuum).
3.Contract of Sale; “Declaration of Heirship and Waiver of Rights” anextrajudicial settlement between heirs under Rule 74 3.Contract of Sale; “Declaration of Heirship and Waiver of Rights” anextrajudicial settlement between heirs under Rule 74 of the Rules of
of the Rules of CourtCourt In
In a a CoContrntracact t of of SaSale, le, one one of of the the cocontrntractacting ing parpartieties s oblobligaigates tes hihimsmself elf tototratransfnsfer er the the owownernershiship p of of and and to to deldeliveiver r aa determinate thing, and theother party to pay a price certain in money or its equivalent. On theother hand, a declaration of determinate thing, and theother party to pay a price certain in money or its equivalent. On theother hand, a declaration of heirship and waiver of rights operates as apublic instrument when filed with the Registry of Deeds whereby theintestate heirship and waiver of rights operates as apublic instrument when filed with the Registry of Deeds whereby theintestate hei
heirs rs adjadjudiudicacate te and dividand divide e the estatthe estate e lefleft t by by the decedthe decedententamamong ong thethemsemselvlves es as as thethey y sesee e fitfit. . It It is is in in effeffect ect anan extrajudicialsettlement between the heirs under Rule 74 of the Rules of Court. In thepresent case, the trial court erred in extrajudicialsettlement between the heirs under Rule 74 of the Rules of Court. In thepresent case, the trial court erred in equating the nature and
equating the nature and effect of the Declaration of Heirship and Waiver of Rights the effect of the Declaration of Heirship and Waiver of Rights the same with a contract (deed) of same with a contract (deed) of sale.sale. 4. Sale of hereditary rights and waiver of hereditary rights distinguished
There is
There is a a marked difference marked difference between a between a sale of sale of hereditary rights hereditary rights and awaiver and awaiver of hereditary of hereditary rights. The rights. The first presumes first presumes thethe existence of acontract or deed of sale between the parties. The second is, technicallyspeaking, a mode of extinction of existence of acontract or deed of sale between the parties. The second is, technicallyspeaking, a mode of extinction of ownership where there is anabdication or intentional relinquishment of a known right withknowledge of its existence and ownership where there is anabdication or intentional relinquishment of a known right withknowledge of its existence and intention to relinquish it, in favor of otherpersons who are co-heirs in the succession. In the present case, de losReyes, intention to relinquish it, in favor of otherpersons who are co-heirs in the succession. In the present case, de losReyes, being then a
being then a stranger to the succession of Cosme Pido, stranger to the succession of Cosme Pido, cannotconccannotconclusively claim ownership over the subject lot on lusively claim ownership over the subject lot on the solethe sole basis of thewaiver document which neither recites the elements of
basis of thewaiver document which neither recites the elements of either a sale, ora donation,or any other derivative modeeither a sale, ora donation,or any other derivative mode of acquiring ownership.
of acquiring ownership.
5.Summon of Ministry of Agrarian Reform
5.Summon of Ministry of Agrarian Reform does not conclude does not conclude actualityactuality of sale nor notice of such
of sale nor notice of such salesale The
The conclusion, conclusion, made made by by the the trial trial and and appellate appellate courts, courts, that that a a “sale”tra“sale”transpired nspired between between Cosme Cosme Pido’s Pido’s heirs heirs and and de de loslos Reyes and that Acapacquired actual knowledge of said sale when he was summoned by theMinistry of Agrarian Reform to Reyes and that Acapacquired actual knowledge of said sale when he was summoned by theMinistry of Agrarian Reform to discuss de los Reyes’ claim over the lot
discuss de los Reyes’ claim over the lot inquestion, has no basis both inquestion, has no basis both in fact and in law.in fact and in law. 6. A notice of adverse claim does not
6. A notice of adverse claim does not prove ownership over the lot;Adverse claim not sufficient to cancel the certificate of prove ownership over the lot;Adverse claim not sufficient to cancel the certificate of tile and foranother to be issued
tile and foranother to be issued in his namein his name
A notice of adverse claim, by its nature, does not however prove privaterespondent’s ownership over the tenanted lot. “A A notice of adverse claim, by its nature, does not however prove privaterespondent’s ownership over the tenanted lot. “A notice of adverseclaim is nothing but a notice of a claim adverse to the registered owner,the validity of which is yet to be notice of adverseclaim is nothing but a notice of a claim adverse to the registered owner,the validity of which is yet to be established in court at some futuredate, and is no better than a notice of lis pendens which is a notice of acase already established in court at some futuredate, and is no better than a notice of lis pendens which is a notice of acase already pending in court.” In the present case, while the existenceof said adverse claim was duly proven (thus being filed with the pending in court.” In the present case, while the existenceof said adverse claim was duly proven (thus being filed with the Registryof Deeds which contained the Declaration of Heirship with Waiver ofrights an was annotated at the back of the Registryof Deeds which contained the Declaration of Heirship with Waiver ofrights an was annotated at the back of the Original Certificate of Title tothe land in question), there is no evidence whatsoever that a deed ofsale was executed Original Certificate of Title tothe land in question), there is no evidence whatsoever that a deed ofsale was executed between Cosme Pido’s heirs and de los Reyestransferring the rights of the heirs to the land in favor of de los Reyes.De los between Cosme Pido’s heirs and de los Reyestransferring the rights of the heirs to the land in favor of de los Reyes.De los Reyes’ right or interest therefore in the tenanted lot remains anadverse claim which cannot by itself be sufficient to cancel Reyes’ right or interest therefore in the tenanted lot remains anadverse claim which cannot by itself be sufficient to cancel the OCT tothe land and title to be issued in de los Reyes’ name.
the OCT tothe land and title to be issued in de los Reyes’ name. 7. Transaction between heirs and de los
7. Transaction between heirs and de los Reyes binding betweenparties, but cannot affect right of Acap Reyes binding betweenparties, but cannot affect right of Acap to tenanted landto tenanted land withoutcorrespo
withoutcorresponding proof thereof While the nding proof thereof While the transaction between Pido’s heirs and de los Reyes transaction between Pido’s heirs and de los Reyes may bebinding on bothmay bebinding on both parties, the right of Acap as
parties, the right of Acap as a registered tenant to theland a registered tenant to theland cannot be perfunctorily forfeited on a mere allegation of decannot be perfunctorily forfeited on a mere allegation of de losReyes’ ownership without the corresponding proof thereof. Acap hadbeen a registered tenant in
losReyes’ ownership without the corresponding proof thereof. Acap hadbeen a registered tenant in the subject land sincethe subject land since 1960 and religiouslypa
1960 and religiouslypaid lease rentals thereon. In id lease rentals thereon. In his mind, he continued to his mind, he continued to be theregistered tenant of Cosme Pido and be theregistered tenant of Cosme Pido and hishis family (after Pido’s death), evenif in 1982, de los Reyes allegedly informed Acap that
family (after Pido’s death), evenif in 1982, de los Reyes allegedly informed Acap that he had become thenew owner of he had become thenew owner of thethe land.
land.
8. No unjustified or deliberate refusal to pay the
8. No unjustified or deliberate refusal to pay the lease rentals to thelease rentals to the
landowner / agricultural lessor De los Reyes never registered the Declaration of Heirship with Waiver ofRights with the landowner / agricultural lessor De los Reyes never registered the Declaration of Heirship with Waiver ofRights with the Registry of Deeds or with the MAR,
Registry of Deeds or with the MAR, but instead, he filed but instead, he filed anotice of adverse claim on the said lot to anotice of adverse claim on the said lot to establish ownershipestablish ownership thereof(which cannot be done). It stands
thereof(which cannot be done). It stands to reason, therefore, to hold that to reason, therefore, to hold that therewas no unjustified or deliberate refusal bytherewas no unjustified or deliberate refusal by Acap to pay the
Acap to pay the lease rentalsor amortizatlease rentalsor amortizations to the ions to the landowner/agrlandowner/agricultural lessor which, in this case,de los Reyes failed toicultural lessor which, in this case,de los Reyes failed to established in his favor by clear and convincingevidence. This notwithstanding the fact that
established in his favor by clear and convincingevidence. This notwithstanding the fact that initially, Acap may have,initially, Acap may have, ingood faith, assumed such statement of
ingood faith, assumed such statement of de los Reyes to be de los Reyes to be true and mayhave in fact delivered 10 cavans of palay astrue and mayhave in fact delivered 10 cavans of palay as annual rental for 1982 tolatter. For in 1983, it is clear that
annual rental for 1982 tolatter. For in 1983, it is clear that Acap had misgivings over de losReyes’ claim of ownership overAcap had misgivings over de losReyes’ claim of ownership over the said land because in
the said land because in the October1983 MAR conferencthe October1983 MAR conference, his wife e, his wife Laurenciana categoricLaurenciana categorically denied all ofde los Reyes’ally denied all ofde los Reyes’ allegations. In fact, Acap even secured a
allegations. In fact, Acap even secured a certificcertificate fromthe MAR dated ate fromthe MAR dated 9 May 1988 to the effect that he 9 May 1988 to the effect that he continued to becontinued to be theregistered tenant of Cosme Pido and
theregistered tenant of Cosme Pido and not of delos Reyes.not of delos Reyes.
9. Sanction of forfeiture of tenant’s preferred right and possession of 9. Sanction of forfeiture of tenant’s preferred right and possession of farmholdings should not be applied The
farmholdings should not be applied The sanction of forfeiture of his preferred right to be issued a sanction of forfeiture of his preferred right to be issued a CertificaCertificateof Landteof Land Transfer under PD 2
Transfer under PD 27 and to the possession of hi7 and to the possession of his farmholdingsshos farmholdingsshould not be applied against Acap, since de lould not be applied against Acap, since de los Reyes hass Reyes has notestablished a cause of
notestablished a cause of action for recovery of possession against Acap.action for recovery of possession against Acap. II. NO CONTRACT OF SALE
II. NO CONTRACT OF SALE
Toyota Shaw v. CA [G.R. No. 116650.May 23, 1995.] Toyota Shaw v. CA [G.R. No. 116650.May 23, 1995.] First Division
First Division, Davide Jr (J): , Davide Jr (J): 3 concur, 1 on leave3 concur, 1 on leave
Facts: Sometime in June 1989, Luna L. Sosa wanted to purchase aToyota Lite Ace. It was then a seller’s market and Sosa Facts: Sometime in June 1989, Luna L. Sosa wanted to purchase aToyota Lite Ace. It was then a seller’s market and Sosa had difficultyfinding a dealer with an available unit for sale. But upon contractingToyota Shaw, Inc., he was told that there had difficultyfinding a dealer with an available unit for sale. But upon contractingToyota Shaw, Inc., he was told that there was an available unit. So on 14June 1989, Sosa and his son, Gilbert, went to the Toyota ShawBoulevard, Pasig, Metro was an available unit. So on 14June 1989, Sosa and his son, Gilbert, went to the Toyota ShawBoulevard, Pasig, Metro Manila. They met Popong Bernardo, a salesrepresentative of Toyota. Sosa emphasized to Bernardo that he neededthe Lite Manila. They met Popong Bernardo, a salesrepresentative of Toyota. Sosa emphasized to Bernardo that he neededthe Lite Ace not later than 17 June 1989 because he, his family, and abalikbayan guest would use it on 18 June 1989 to go Ace not later than 17 June 1989 because he, his family, and abalikbayan guest would use it on 18 June 1989 to go Marinduque, hishome province, where he would celebrate his birthday on 19 June. Headded that if he does not arrive in his Marinduque, hishome province, where he would celebrate his birthday on 19 June. Headded that if he does not arrive in his hometown with the new
hometown with the new car, hewould become a “laughing stock.” Bernardo assured car, hewould become a “laughing stock.” Bernardo assured Sosa that a unitwould Sosa that a unitwould be ready for pickbe ready for pick up at 10:00 a.m. on 17 June 1989. Bernardo then signed a document entitled “Agreements Between Mr. Sosa &Popong up at 10:00 a.m. on 17 June 1989. Bernardo then signed a document entitled “Agreements Between Mr. Sosa &Popong Bern
Bernardo of ardo of ToyToyota ota ShawShaw, , Inc,Inc,” ” stipstipulatulating ing that all that all necenecessarssarydocydocumentuments s wilwill l be be submsubmitted to itted to ToyToyota ota Shaw (PopongShaw (Popong Bernardo) a weekafter, upon arrival of Mr. Sosa from the Province (Marinduque) where theunit will be used on the 19 June; Bernardo) a weekafter, upon arrival of Mr. Sosa from the Province (Marinduque) where theunit will be used on the 19 June; that the downpayment of P100,000.00will be paid by Mr. Sosa on 15 June 1989; and that the Toyota Shaw, Inc.will be that the downpayment of P100,000.00will be paid by Mr. Sosa on 15 June 1989; and that the Toyota Shaw, Inc.will be released a yellow Lite Ace unit.It was also agreed upon by theparties that the balance of the purchase price would be paid released a yellow Lite Ace unit.It was also agreed upon by theparties that the balance of the purchase price would be paid by creditfinancing through B.A. Finance, and for this Gilbert, on behalf of hisfather, signed the documents of Toyota and by creditfinancing through B.A. Finance, and for this Gilbert, on behalf of hisfather, signed the documents of Toyota and B.A. Financ
B.A. Finance e pertpertaininaining g tothe applictothe application for ation for finafinancingncing. . The next The next dayday, , Sosa and Sosa and GilbGilbert ert wenwent t toTotoToyota to yota to delivdeliver er thethe down
downpaympayment ent of of P10P100,000,000.000.00. . They met They met BernBernardoardowho who then then accaccomplomplished ished a a prinprinted ted VehiVehicle cle Sales ProposaSales Proposal l (VSP)(VSP)928928,, onwhich Gilbert signed under the subheading “conforme”. This documentshows that the customer’s name is “Mr. Luna onwhich Gilbert signed under the subheading “conforme”. This documentshows that the customer’s name is “Mr. Luna Sosa” with home addressat 2316 Guijo Street, United Parañaque II; that the model series of thevehicle is a “Lite Ace Sosa” with home addressat 2316 Guijo Street, United Parañaque II; that the model series of thevehicle is a “Lite Ace 1500
1500″″described as “4 Dr minibus”; that paymentis by “installment,” to be financed by “B.A.,” with the initial cash outlayof described as “4 Dr minibus”; that paymentis by “installment,” to be financed by “B.A.,” with the initial cash outlayof
P100,000
Service fee: P500.00;and accessories: P29,000.00) and the balance to be financed isP274,137.00. The spaces provided for “delivery terms” were not filled-up. It also contains conditions of sales providing that the sale is subjectto the availability of the unit, and that the stated price is subject tochange without prior notice, and that the price prevailing and in effectat time of selling will apply. Rodrigo Quirante, the Sales Supervisor ofBernardo, checked and approved the VSP.
On 17 June (9:30 a.m.), Bernardo called Gilbert to inform him that thevehicle would not be ready for pick up at 10:00 a.m. as previouslyagreed upon but at 2:00 p.m. that same day. At 2:00 p.m., Sosa andGilbert met Bernardo at the latter’s office. According to Sosa, Bernardoinformed them that the Lite Ace was being readied for delivery. Afterwaiting for about an hour, Bernardo told them that the car could not bedelivered because it was acquired by a more influential person. Toyotacontends, however, that the Lite Ace was not delivered to Sosa becauseof the disapproval of B.A. Finance of the credit financing application ofSosa. It further alleged that a particular unit had already been reversedand earmarked for Sosa but could not be released due to theuncertainty of payment of the balance of the purchase price. Toyotathen gave Sosa the option to purchase the unit by paying the fullpurchase price in cash but Sosa refused.After it became clear that theLite Ace would not be delivered to him, Sosa asked that hisdownpayment be refunded. Toyota did so on the very same day byissuing a Far East Bank check for the full amount of P100,000.00, thereceipt of which was shown by a check voucher of Toyota, which Sosasigned with the reservation, “without prejudice to our future claims fordamages.” Thereafter, Sosa sent two letters to Toyota: one on 27 June1989 demanding the refund, within 5 days from receipt, of thedownpayment of P100,000.00 plus interest from the time he paid it andthe payment of damages with a warning that in case of Toyota’s failureto do so he would be constrained to take legal action; and the other on 4November 1989 (signed by M.O. Caballes, Sosa’s counsel) demandingP1M representing interest and damages, again, with a warning that legalaction would be taken if payment was not made within 3 days. Toyota’scounsel answered through as letter dated 27 November 1989 8 refusingto accede to the demands of Sosa.
But even before the answer was made and received by Sosa, the latterfiled on 20 November 1989 with the RTC Marinduque (Branch 38) acomplaint against Toyota for damages under Articles 19 and 21 of theCivil Code in the total amount of P1,230,000.00.After trial on the issueagreed upon during the pre-trial session, the trial court rendered on 18February 1992 a decision in favor of Sosa. It ruled that the “Agreementbetween Mr. Sosa and Popong Bernardo,” was a valid perfected andcontract of sale between Sosa and Toyota which bound Toyota to deliverthe vehicle to Sosa, and further agreed with Sosa that Toyota acted inbad faith in selling to another the unit already reserved for him; thatBernardo, as an authorized sales executive of Toyota Shaw, was thelatter’s agent and thus bound Toyota Shaw; that Luna Sosa proved hissocial standing in the community and suffered besmirched reputation,wounded feelings and sleepless nights for which he ought to becompensated; and thus rendered judgment ordering Toyota Shaw to paySosa the sum of P75,000 as moral damages, P10,000 as exemplarydamages, P30,000 as attorney’s fees plus P2,000 lawyer’stransportation fare per trip in attending to the hearing of the case,P2,000 for Sosa’s transportation fare per trip in attending the hearing ofthe case, and to pay the cost of the suit.
Dissatisfied with the trial court’s judgment, Toyota appealed to theCourt of Appeals (CA-GR CV 40043). In its decision promulgated on 29July 1994, the Court of Appeals affirmed in toto the appealed decision.Hence the petition for review by certiorari by Toyota Shaw.
The Supreme Court granted the petition, and dismissed the challengeddecision of the Court of Appeals and that of Branch 38 of the RegionalTrial Court of Marinduque, and the counterclaim therein; withoutpronouncement as to costs.
1.Contract of sale defined; Kinds
Article 1458 of the Civil Code defines a contract of sale as “By thecontract of the sale one of the contracting parties obligates himself totransfer the ownershipof and to deliver a determinate thing, and theother to pay therefor a price certain in money or its equivalent. Acontract of sale may be absolute or conditional.
2.Contract of sale, when perfected; Effect
Article 1475 of the Civil Code specifically provides when the contract ofsale is deemed perfected, i.e. “The contract of sale is perfected at themoment there is a meeting of minds upon the thing which is the objectof the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing the form of contracts. 3.“Agreement between Mr. Sosa & Popong Bernardo of Toyota Shaw,
Inc.” not a contract of sale
The “Agreements between Mr. Sosa & Popong Bernardo of Toyota Shaw,Inc.” executed on 4 June 1989, is not a contract of sale. No obligation onthe part of Toyota to transfer ownership of a determinate thing to Sosaand no correlative obligation on the part of the latter to pay therefor aprice certain appears therein. The provision on the downpayment ofP100,000.00 made no specific reference to a sale, it could only refer to asale on installment basis, as the VSP executed the following dayconfirmed. But nothing was mentioned about the full purchase price andthe manner the installments were to be paid. Neither logic nor recourseto one’s imagination can lead to the conclusion that such agreement is aperfected contract of sale.
4.Definitive price is an essential element in the formation of a binding and enforceable contract of sale
A definite agreement on the manner of payment of the price is anessential element in the formation of a binding and enforceable contractof sale. This is so because the agreement as to the manner of paymentgoes into the price such that a disagreement on the manner of paymentis tantamount to a failure to agree on the price. Definiteness as to theprice is an essential element of a binding agreement to sell personalproperty.
The “Agreements between Mr. Sosa & Popong Bernardo of Toyota Shaw,Inc.” shows the absence of a meeting of minds between Toyota andSosa. Sosa did not even sign it. Further, Sosa was well aware from itstitle, written in bold letters, and thus knew that he was not dealing withToyota but with Popong Bernardo and that the latter did notmisrepresent that he had the authority to sell any Toyota vehicle.
6.Prudence and reasonable diligence in inquiring authority of agent
Sosa knew that Bernardo was only a sales representative of Toyota andhence a mere agent of the latter. It was incumbent upon Sosa to actwith ordinary prudence and reasonable diligence to know the extent ofBernardo’s authority as an agent in respect of contracts to sell Toyota’svehicles. A person dealing with an agent is put upon inquiry and mustdiscover upon his peril the authority of the agent.
7.Three stages in the contract of sale
There are three stages in the contract of sale, namely (a) preparation,conception, or generation, which is the period of negotiation andbargaining, ending at the moment of agreement of the parties; (b)perfection of birth of the contract, which is the moment when the partiescome to agree on the terms of the contract; and (c) consummation ordeath, which is the fulfillment or performance of the terms agreed uponin the contract. In the present case, the “Agreements between Mr. Sosa& Popong Bernardo of Toyota Shaw, Inc.” may be considered as part ofthe initial phase of the generation of negotiation stage of a contractsale. The second phase of the generation or negotiation stage was theexecution of the VSP (the downpayment of the purchase price wasP53,148.00 while the balance to be paid on installment should befinanced by B.A. Finance. It is assumed that B.A Finance was acceptableto Toyota).
8.Financing companies defined
Financing companies are defined in Section 3(a) of RA 5980, asamended by PDs 1454 and 1793, as “corporations or partnerships,except those regulated by the Central Bank of the Philippines, theInsurance Commission and the and the Cooperatives AdministrationOffice, which are primarily organized for the purpose of extending creditfacilities to consumers and to industrial, commercial, or agriculturalenterprises, either by discounting or factoring commercial papers oraccounts receivable, or by buying and selling contracts, leases, chattelmortgages, or other evidence of indebtedness, or by leasing of motorvehicles, heavy equipment and industrial machinery, business and officemachines and equipment, appliances and other movable property.”
9. Parties in a sale on installment basis financed by a financingcompany; No meeting of minds as financing application was disapproved
In a sale on installment basis which is financed by a financing company,3 parties are thus involved: (1) the buyer who executes a note or notesfor the unpaid balance of the price of the thing purchased oninstallment, (2) the seller who assigns the notes or discounts them witha financing company, and (3) the financing company which issubrogated in the place of the seller, as the creditor of the installmentbuyer. Since B.A. Finance did not approve Sosa’s application, there wasthen no meeting of minds on the sale on installment basis.
10. Toyota’s version of circumstances leading to non-release of vehicle more credible
Toyota’s version that B.A. Finance disapproved Sosa’s application forwhich reason it suggested to Sosa that he pay the full purchase price ismore credible. When the latter refused, Toyota cancelled the VSP andreturned to him his P100,000.00. Sosa’s version, that the VSP wascancelled because the vehicle was delivered to another because of amore influential client, is contradicted by paragraph 7 of his complaintwhich states that Bernardo “for reasons known only to itsrepresentatives, refused and/or failed to release the vehicle to theplaintiff . Plaintiff demanded for an explanation, but nothing was given.” 11.VSP mere proposal and did not create demandable right in favor of Sosa when it was aborted
The VSP was a mere proposal which was aborted in lieu of subsequent events. Thus, the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury. 12.Award of moral damages without legal basis
The award of moral damages is without legal basis. The only groundupon which Sosa claimed moral damages is that since it was known tohis friends, townmates, and relatives that he was buying a Toyota LiteAce which they expected to see on his birthday, he suffered humiliation,shame, and sleepless nights when the van was not delivered. The vanbecame the subject matter of talks during his celebration that he maynot have paid for it, and this created an impression against his businessstanding and reputation created an impression against his businessstanding and reputation. At the bottom of this claim is nothing butmisplaced pride and ego. He should not have announced his plan to buyToyota Lite Ace knowing that he might not be able to pay the fullpurchase price. It was he who brought embarrassment upon himself bybragging about a thing which he did not own yet.
13.Award of exemplary damages without basis; Purpose of exemplary damages
Since Sosa is not entitled to moral damages and there being no awardfor temperate, liquidated, or compensatory damages, he is likewise notentitled to exemplary damages. Under Article 2229 of the Civil Code,exemplary or corrective damages are imposed by way of example orcorrection for the public good, in addition to moral, temperate,liquidated, or compensatory damages.
14.Award of attorney’s fees without basis
For attorney’s fees to be granted the court must explicitly state in thebody of the decision, and not only in the dispositive portion thereof, thelegal reason for the award of attorney’s fees. No such explicitdetermination thereon was made in the body of the decision of the trialcourt. Thus, no reason exists for such award.
B. ESSENTIAL CHARACTERISTICS OF CONTRACT OF SALE 1. NOMINATE AND PRINCIPAL
Romero v. CA 250 SCRA 15
Facts: Virgilio Romero and his foreign partners decided to put up acentral warehouse in Metro Manila. Alfonso Flores, in behalf of EnriquetaChua vda. De Ongsiong, proposed the latter’s lot to Romero as the sitefor the said warehouse. A contract denominated as “Deed of ConditionalSale” was executed between Romero and Ongsiong where the amountof P50,000 was received from Romero for the purpose of taking up amejectment case against the squatters found therein. Ongsiong sought toreturn the amount she received from Romero as she claimed she isunable to rid the land of squatters, notwithstanding the favorablejudgment already promulgated by the court in the ejectment case.Romero’s counsel refused the tender and expressed willingness tounderwrite the expense of executing the judgment chargeable to thepurchase price of the land. Ongsiong filed a case with the trial court forthe rescission of the deed of “conditional” sale, and for the consignationof the amount of P50,000. The trial court rendered a decision in favor ofRomero, which was reversed by the Court of Appeals.
Issue:Whether the “Deed of Conditional Sale” is a perfected contract of sale
Held: The deed of sale, even if denominated as a deed of conditionalsale, may be treated as absolute in nature, especially if title to theproperty sold is not reserved in the vendor or if the vendor is notgranted the right to unilaterally rescind the contract predicated on thefulfillment or non-fulfillment of the prescribed condition. In determiningthe real character of contract, the substance and not the title given bythe party is more significant. Upon perfection, i.e. where the sellerobligates himself, for a price certain, to deliver and to transferownership of a specific thing or right to the buyer over which the latteragrees, the parties are bound not only to the fulfillment of what wasexpressly stipulated but also the consequences which may be in keepingwith good faith, usage and law. Being a perfected contract of sale, norescission can be had. The proper action is an action for damages.Arguendo that rescission is available as a remedy, as provide by Article1191 in reciprocal obligations, it may only be availed of by the injured party.
2.CONSENSUAL
Quijada v. CA [G.R. No. 126444.December 4, 1998.] Second Division, Martinez (J): 3 concur
Facts: Petitioners (Alfonso, Cresente, Reynalda, Demetrio, Eliuteria,Eulalio, and Warlito) are the children of the late Trinidad Corvera Vda. deQuijada. Trinidad was one of the heirs of the late Pedro Corvera andinherited from the latter the 2-hectare parcel of land subject of the case,situated in the barrio of San Agustin, Talacogon, Agusan del Sur. On 5April1956, Trinidad Quijada together with her sisters Leonila CorveraVda. de Sequeña and Paz Corvera Cabiltes and brother
EpapiaditoCorvera executed a conditional deed of donation of the 2-hectare parcelof land in favor of the Municipality of Talacogon, the condition being thatthe parcel of land shall be used solely and exclusively as part of thecampus of the proposed provincial high school in Talacogon. Apparently,Trinidad remained in possession of the parcel of land despite thedonation. On 29 July 1962, Trinidad sold 1 hectare of the subject parcelof land to Regalado Mondejar. Subsequently, Trinidad verbally sold theremaining 1 hectare to Mondejar without the benefit of a written deed ofsale and evidenced solely
by receipts of payment. In 1980, the heirs ofTrinidad, who at that time was already dead, filed a complaint forforcible entry against Mondejar, which complaint was, however,dismissed for failure to prosecute. In 1987, the proposed provincial high school having failed to materialize, the Sangguniang Bayan of themunicipality of Talacogon enacted a resolution reverting the 2 hectaresof land donated back to the donors. In the meantime, Mondejar soldportions of the land to Fernando Bautista, Rodolfo Goloran, Efren Guden,and Ernesto Goloran.
On 5 July 1988, the petitioners filed a complaint against privaterespondents (Mondejar, Rodulfo and Ernesto Goloran, Asis, Ras, Abiso,Bautista, Macasero and Maguisay) for quieting of title, recovery ofpossession and ownership of parcels of land with claim for attorney’sfees and damages. The trial court rendered judgment in favor of thepetitioners, holding that Trinidad Quijada did not have legal title or rightto sell the land to Mondejar as it belongs to the Municipality ofTalacogon at that time, and that the deed of sale in favor of Mondejardid not carry the conformity and acquiescence of her childrenconsidering that Trinidad was already 63 years old and a widow. Thetrial court ordered the defendants (private respondents), and any personacting in defendants’ behalf to return and vacate the 2 hectares of landto the plaintiff, and to remove their improvements constructed on thelot; ordered the cancellation of the deed of sale executed by Trinidad toMondejar, as well as the deeds of sale/relinquishments executed byMondejar to the other defendants; and ordered the defendants to paythe plaintiffs, in solidum, the amount of P10,000, P8,000, and P30,000as attorney’s fees, expenses of litigation and moral damages, respectively.
On appeal, the Court of Appeals reversed and set aside the judgment aquo ruling that the sale made by Trinidad Quijada to respondentMondejar was valid as the former retained an inchoate interest on thelots by virtue of the automatic reversion clause in the deed of donation.Thereafter, petitioners filed a motion for reconsideration. When the CAdenied their motion, petitioners instituted a petition for review to theSupreme Court.
The Supreme Court affirmed the assailed decision of the Court of Appeals.
1. Condition valid in donation if not contrary to law, morals, good customs, public order or public policy
The donation made on April 5, 1956 by Trinidad Quijada and her brotherand sisters was subject to the condition that the donated property shallbe “used solely and exclusively as a part of the campus of the proposedProvincial High School in Talacogon.” The donation further provides thatshould “the proposed Provincial High School be discontinued or if thesame shall be opened but for some reason or another, the same may inthe future be closed” the donated property shall automatically revert tothe donor. Such condition, not being contrary to law, morals, goodcustoms, public order or public policy was validly imposed in the donation.
When the Municipality’s acceptance of the donation was made known tothe donor, the former became the new owner of the donated property,donation being a mode of acquiring and transmitting ownership,notwithstanding the condition imposed by the donee. The donation isperfected once the acceptance by the donee is made known to thedonor. Accordingly, ownership is immediately transferred to the latterand that ownership will only revert to the donor if the resolutorycondition is not fulfilled.
3. Condition to construct school is a resolutory condition
The resolutory condition, in the present case, is the construction of theschool. It has been ruled that when a person donates land to another onthe condition that the latter would build upon the land a school, thecondition imposed is not a condition precedent or a suspensivecondition but a resolutory one. So long as the resolutory conditionsubsists and is capable of fulfillment, the donation remains effective andthe donee continues to be the owner subject only to the rights of thedonor or his successors-in-interest under the deed of donation. Since noperiod was imposed by the donor on when must the donee comply withthe condition, the latter remains the owner so long as he has tried tocomply with the condition within a reasonable period. Such period,however, became irrelevant herein when the donee manifested that itcannot comply with the condition and the same was made known to thedonor. Only then, when the non-fulfillment of the resolutory conditionwas brought to the donor’s knowledge, that ownership of the donatedproperty reverted to the donor as provided in the automatic reversionclause of the deed of donation.
4. Inchoate interest may be subject of contract including a contract ofsale; Interest over property under conditional deed of donation, not theland itself
The donor may have an inchoate interest in the donated property duringthe time that ownership of the land has not reverted to her. Suchinchoate interest may be the subject of contracts including a contract ofsale. In the present case, however, what the donor sold was the landitself which she no longer owns. It would have been different if thedonor-seller sold her interests over the property under the deed ofdonation which is subject to the possibility of reversion of ownershiparising from the non-fulfillment of the resolutory condition.
5. Laches, elements
Laches presupposes failure or neglect for an unreasonable andunexplained length of time, to do that which, by exercising duediligence, could or should have been done earlier; “it is negligence oromission to assert a right within a reasonable time, thus, giving rise to apresumption that the party entitled to assert it either has abandoned ordeclined to assert it.” Its essential elements of (a) Conduct on the partof the defendant, or of one under whom he claims, giving rise to thesituation complained of; (b) Delay in asserting complainant’s right afterhe had knowledge of the defendant’s conduct and after he has an opportunity to sue; (c) Lack of knowledge or notice on the part of thedefendant that the complainant would assert the right on which hebases his suit; and, (d) Injury or prejudice to the defendant in the eventrelief is accorded to the complainant” are absent in this case. In thepresent case, petitioners’ cause of action to quiet title commenced onlywhen the property reverted to the donor and/or his successors-in-interest in 1987, not in the 1960’s when they had no interest over theproperty at that time except under the deed of donation to whichprivate respondents were not privy. Moreover, petitioners hadpreviously filed an ejectment suit against private respondents only thatit did not prosper on a technicality. 6. Sale, being a consensual contract, is perfected by mere consent;
Seller need not own property when sold but when delivered
Sale, being a consensual contract, is perfected by mere consent, whichis manifested the moment there is a meeting of the minds as to theoffer and acceptance thereof on three (3) elements: subject matter,price and terms of payment of the price. Ownership by the seller on thething sold at the time of the perfection of the contract of sale is not anelement for its perfection. What the law requires is that the seller hasthe right to transfer ownership at the time the thing sold is delivered.Perfection per se does not transfer ownership which occurs upon theactual or constructive delivery of the thing sold. A perfected contract ofsale cannot be challenged on the ground of non-ownership on the partof the seller at the time of its perfection; hence, the sale is still valid.
7.Seller’s title passes by operation of law to the buyer
The consummation of the perfected contract is another matter. It occursupon the constructive or actual delivery of the subject matter to thebuyer when the seller or her successors-in-interest subsequentlyacquires ownership thereof.In the present case, such circumstancehappened in this case when petitioners (Trinidad’s heirs) became theowners of the subject property upon the reversion of the ownership ofthe land to them. Consequently, ownership is transferred to Mondejarand those who claim their right from him. Article 1434 of the New CivilCode supports the ruling that the seller’s “title passes by operation oflaw to the buyer.” This rule applies not only when the subject matter ofthe contract of sale is goods, but also to other kinds of property,including real property.
8. Article 1409 (4) does not provide that the properties of amunicipality are outside the commerce of man; Objects outside of thecommerce of man are those which cannot be appropriated
Nowhere in Article 1409 (4) is it provided that the properties of amunicipality, whether it be those for public use or its patrimonialproperty, are outside the commerce of men; so as to render the contractinvolving the same inexistent and void from the beginning when sold. Inthe present case, the lots were conditionally owned by the municipality.To rule that the donated properties are outside the commerce of menwould render nugatory the unchallenged reasonableness and justness ofthe condition which the donor has the right to impose as owner thereof.Moreover, the objects referred to as outside the commerce of man arethose which cannot be appropriated, such as the open seas and theheavenly bodies.
9. No factual or legal basis for the award of fees and damages
There is neither factual nor legal basis for the trial court’s award ofattorney’s fees, litigation expenses and moral damages. Attorney’s feesand expenses of litigation cannot, following the general rule in Article2208 of the New Civil Code, be recovered in the present case, therebeing no stipulation to that effect and the case does not fall under anyof the exceptions. It cannot be said that private respondents hadcompelled petitioners to litigate with third persons. Neither can it beruled that the former acted in “gross and evident bad faith” in refusingto satisfy the latter’s claims considering that
private respondents wereunder an honest belief that they have a legal right over the property byvirtue of the deed of sale. Moral damages cannot likewise be justified asnone of the circumstances enumerated under Articles 2219 27 and 222028 of the New Civil Code concur in this case.
Fule v. CA [G.R. No. 112212.March 2, 1998.] Third division, Romero (J): 3 concur
Facts: Fr. Antonio Jacobe initially mortgage a 10-hectare property inTanay, Rizal (covered by TCT 320725) to the Rural Bank of Alaminos,Laguna to secure a loan in the amount of P10,000. Said mortgage waslater foreclosed and the property offered for public auction upon hisdefault. In June 1984, Gregorio Fule, as corporate secretary of the bank,asked Remelia Dichoso and Olivia Mendoza to look for a buyer whomight be interested in the Tanay property. The two found one in theperson of Ninevetch Cruz. It so happened that in January of said year,Gregorio Fule, also a jeweler, has shown interest in buying a pair ofemerald-cut diamond earrings owned by Dr. Cruz. Dr. Cruz has declinedFule’s offer to buy said jewelry for P100,000; and a subsequent bid byFule to buy them for US$6,000 at $1 to P25 while making a sketch ofsaid jewelry during an inspection at the lobby of Prudential Bank (thelatter instance was declined, since the exchange rate appreciated to P19per dollar). Subsequently, however, negotiations for the barter of thejewelry and the Tanay property ensued. Atty. Belarmino was requestedby Dr. Cruz to check the property and found out that no sale or barterwas feasible as the 1-year period of redemption has not expired.In aneffort to cut through any legal impediment, Fule executed on 19 October1984, a deed of redemption on behalf of Fr. Jacobe purportedly in theamount of P15,987.78, and on even date, Fr. Jacobe sold the property toFule for P75,000.00. The haste with which the two deeds were executedis shown by the fact that the deed of sale was notarized ahead of thedeed of redemption. As Dr. Cruz had already agreed to the proposedbarter, Fule went to Prudential Bank to take a look at the jewelry. On 23 October 1984, Fule met Atty. Belarmino at the latter’s residence to prepare the documents of sale. Atty. Belarmino accordingly caused the preparation of a deed of absolute sale while Fule and Dr. Cruzattended to the safekeeping of the jewelry. The following day, Fule,together with Dichoso and Mendoza, arrived at the residence of Atty.Belarmino to finally execute a deed of absolute sale. Fule signed thedeed and gave Atty. Belarmino the amount of P13,700.00 for necessaryexpenses in the transfer of title over the Tanay property; and issued acertification to the effect that the actual consideration of the sale wasP200,000.00 and not P80,000.00 as indicated in the deed of absolutesale (the disparity purportedly aimed at minimizing the amount of thecapital gains tax that Fule would have to shoulder). Since the jewelrywas appraised only at P160,000.00, the parties agreed that the balanceof P40,000.00 would just be paid later in cash. Thereafter, at the bank,as pre-arranged, Dr. Cruz and the cashier opened the safety depositbox, and delivered the contents thereof to Fule. Fule inspected thejewelry, near the electric light at the bank’s lobby, for 10-15 minutes.Fule expressed his satisfaction by nodding his head when asked by Dr.Cruz if the jewelry was okay. For services rendered, Fule paid theagents, Dichoso and Mendoza, the amount of US$300.00 and somepieces of jewelry. He did not, however, give them half of the pair ofearrings in question, which he had earlier promised. Later in
theevening, Fule arrived at the residence of Atty. Belarmino complainingthat the jewelry given him was fake. Dichoso, who borrowed the car ofDr. Cruz, called up Atty. Belarmino. Informed that Fule was at thelawyer’s house, went there posthaste thinking that Fule had finallyagreed to give them half of the pair of earrings, only to find Fuledemonstrating with a tester that the earrings were fake. Fule thenaccused Dichoso and Mendoza of deceiving him which they, however,denied. They countered that Fule could not have been fooled becausehe had vast experience regarding jewelry. Fule nonetheless took backthe US$300.00 and jewelry he had given them. Thereafter, the groupdecided to go to the house of a certain Macario Dimayuga, a jeweler, tohave the earrings tested. Dimayuga, after taking one look at theearrings, immediately declared them counterfeit. At around 9:30 p.m.,Fule went to one Atty. Reynaldo Alcantara residing at LakesideSubdivision in San Pablo City, complaining about the fake jewelry. Uponbeing advised by the latter, Fule reported the matter to the policestation where Dichoso and Mendoza likewise executed sworn statements.
On 26 October 1984, Fule filed a complaint before the RTC San PabloCity against private respondents praying, among other things, that thecontract of sale over the Tanay property be declared null and void onthe ground of fraud and deceit. On 30 October 1984, the lower courtissued a temporary restraining order directing the Register of Deeds ofRizal to refrain from acting on the pertinent documents involved in thetransaction. On 20 November 1984, however, the same court lifted itsprevious order and denied the prayer for a writ of preliminary injunction.After trial, the lower court rendered its decision on 7 March 1989;holding that the genuine pair of earrings used as consideration for thesale was delivered by Dr. Cruz to Fule, that the contract was valid evenif the agreement between the parties was principally a barter contract,that the agreement has been consummated at the time the principalparties parted ways at the bank, and that damages are due to thedefendants. From the trial court’s adverse decision, petitioner elevatedthe matter to the Court of Appeals. On 20 October 1992, the Court ofAppeals, however, rendered a decision affirming in toto the lower court’sdecision. His motion for reconsideration having been denied on 19October 1993. Hence, the petition for review on certiorari.
The Supreme Court affirmed in toto the decision of the Court of Appeals,but ordered Dr. Cruz to pay Fule the balance of the purchase price ofP40,000 within 10 days from the finality of the decision; with costsagainst petitioner.
1.New factual issues cannot be examined as it unduly transcends the limits of the Supreme Court’s review power
The Supreme Court cannot entertain a factual issue, and thus examineand weigh anew the facts regarding the genuineness of the earringsbartered in exchange for the Tanay property, as this would undulytranscend the limits of the Court’s review power in petitions of thisnature which are confined merely to pure questions of law. As a generalrule, the Supreme Court accords conclusiveness to a lower court’sfindings of fact unless it is shown, inter alia, that: (1) the conclusion is afinding grounded on speculations, surmises or conjectures; (2) theinference is manifestly mistaken, absurd and impossible; (3)
when thereis a grave abuse of discretion; (4) when the judgment is based on amisapprehension of facts; (5) when the findings of fact are conflicting;and (6) when the Court of Appeals, in making its findings, went beyondthe issues of the case and the same is contrary to the admission of bothparties.To reiterate, the Supreme Court’s jurisdiction is only limited toreviewing errors of law in the absence of any showing that the findingscomplained of are totally devoid of support in the record or that they areglaringly erroneous as to constitute serious abuse of discretion.
2.Immediate rendition of decision not anomalous
No proof has been adduced that Judge Jaramillo was motivated by amalicious or sinister intent in disposing of the case with dispatch.Neither is there proof that someone else wrote the decision for him. Theimmediate rendition of the decision was no more than Judge Jaramillo’scompliance with his duty as a judge to “dispose of the court’s businesspromptly and decide cases within the required periods.” The two-yearperiod within which Judge Jaramillo handled the case provided him withall the time to study it and even write down its facts as soon as thesewere presented to court. In fact, the Supreme Court does not seeanything wrong in the practice of writing a decision days before thescheduled promulgation of judgment and leaving the dispositive portionfor typing at a time close to the date of promulgation, provided that nomalice or any wrongful conduct attends its adoption. The practice servesthe dual purposes of safeguarding the confidentiality of draft decisionsand rendering decisions with promptness. Neither can Judge Jaramillo bemade administratively answerable for the immediate rendition of the decision. The acts of a judge which pertain to his judicial functions arenot subject to disciplinary power unless they are committed with fraud,dishonesty, corruption or bad faith.Hence, in the absence of sufficientproof to the contrary, Judge Jaramillo is presumed to have performed hisjob in accordance with law and should instead be commended for hisclose attention to duty.
3.Contract perfected by mere consent, binds parties to stipulation andall the consequences; Contract of sale perfected upon meeting of mindsupon the thing object of the contract and upon price; Embodiment ofcontract in public instrument only for convenience, and registration onlyto affect third parties; Lack of formal requirements does not invalidatethe contract
The Civil Code provides that contracts are perfected by mere consent.From this moment, the parties are bound not only to the fulfillment ofwhat has been expressly stipulated but also to all the consequenceswhich, according to their nature, may be in keeping with good faith,usage and law.A contract of sale is perfected at the moment there is ameeting of the minds upon the thing which is the object of the contractand upon the price. Being consensual, a contract of sale has the force oflaw between the contracting parties and they are expected to abide ingood faith by their respective contractual commitments.
Article 1358 of the Civil Code which requires the embodiment of certaincontracts in a public instrument, is only for convenience, andregistration of the instrument only adversely affects third parties.Formal requirements are, therefore, for the benefit of third parties. Non-compliance therewith does not adversely affect the validity of thecontract nor the contractual rights and obligations of the partiesthereunder.
4. Voidable or annullable contracts
Contracts that are voidable or annullable, even though there may havebeen no damage to the contracting parties are: (1) those where one ofthe parties is incapable of giving consent to a contract; and (2) thosewhere the consent is vitiated by mistake, violence, intimidation, undueinfluence or fraud. The contract can be voided in accordance with law soas to compel the parties to restore to each other the things that havebeen the subject of the contract with their fruits, and the price with interest.
5. Fraud; No inducement made by the private respondents
There is fraud when, through the insidious words or machinations of oneof the contracting parties, the other is induced to enter into a contractwhich, without them, he would not have agreed to. In the present case,the records, are bare of any evidence manifesting that privaterespondents employed such insidious words or machinations to enticepetitioner into entering the contract of barter. Neither is there anyevidence showing that Dr. Cruz induced petitioner to sell his Tanayproperty or that she cajoled him to take the earrings in exchange forsaid property. On the contrary, Dr. Cruz did not initially accede topetitioner’s proposal to buy the said jewelry. Rather, it appears that itwas petitioner, through his agents, who led Dr. Cruz to believe that theTanay property was worth exchanging for her jewelry as he representedthat its value was P400,000.00 or more than double that of the jewelrywhich was valued only at P160,000.00. If indeed petitioner’s propertywas truly worth that much, it was certainly contrary to the nature of abusinessman-banker like him to have parted with his real estate for halfits price. In short, it was in fact petitioner who resorted to machinationsto convince Dr. Cruz to exchange her jewelry for the Tanay property.
7. Mistake; Mistake caused by manifest negligence cannot invalidate a judicial act
To invalidate a contract, mistake must “refer to the substance of thething that is the object of the contract, or to those conditions which haveprincipally moved one or both parties to enter into the contract.”Anexample of mistake as to the object of the contract is the substitution ofa specific thing contemplated by the parties with another. In the presentcase, the petitioner failed to prove the fact that prior to the delivery ofthe jewelry to him, private respondents endeavored to make suchsubstitution of an inferior one or one with Russian diamonds for thejewelry he wanted to exchange with his 10-hectare land. Further, onaccount of his work as a banker-jeweler, it can be rightfully assumedthat he was an expert on matters regarding gems. He had theintellectual capacity and the business acumen as a banker to takeprecautionary measures to avert such a mistake, considering the valueof both the jewelry and his land. A mistake caused by manifestnegligence cannot invalidate a juridical act. As the Civil Code provides,“(t)here is no mistake if the party alleging it knew the doubt,contingency or risk affecting the object of the contract.”
8. Contract of sale absolute if no stipulation that title to property isreserved to seller until full payment; Ownership transferred upon actualor constructive delivery
A contract of sale being absolute in nature, title passed to the vendeeupon delivery of the thing sold since there was no stipulation in thecontract that title to the property sold has been reserved in the selleruntil full payment of the price or that the vendor has the right tounilaterally resolve the contract the moment the buyer fails to paywithin a fixed period. Such stipulations are not manifest in the contractof sale. In the present case, both the trial and appellate courts,therefore, correctly ruled that there were no legal bases for thenullification of the contract of sale. Ownership over the parcel of landand the pair of emerald-cut diamond earrings had been transferred toDr. Cruz and Fule, respectively, upon the actual and constructivedelivery thereof.
9. Contract silent when balance is due and demandable; non-payment does not invalidate the contract
While it is true that the amount of P40,000.00 forming part of theconsideration was still payable to Fule, its nonpayment by Dr. Cruz is nota sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchanged considering the fact
that their contract is silent as to when it becomes due and demandable. 10. No interest due if it is not stipulated
Failure to pay the balance of the purchase price does not result in thepayment of interest thereon. Article 1589 of the Civil Code prescribesthe payment of interest by the vendee “for the period between thedelivery of the thing and the payment of the price” in cases “(1) Shouldit have been so stipulated; (2) Should the thing sold and deliveredproduce fruits or income; (3) Should he be in default, from the time ofjudicial or extrajudicial demand for the payment of the price.”
11. Case distinguished from de la Cruz v Legaspi
The present case should be distinguished from De la Cruz v. Legaspi,where the court held that failure to pay the consideration after thenotarization of the contract as previously promised resulted in thevendee’s liability for payment of interest. In the present, there is nostipulation for the payment of interest in the contract of sale nor proofthat the Tanay property produced fruits or income. Neither did petitionerdemand payment of the price as in fact he filed an action to nullify thecontract of sale.
12. Award of moral and exemplary damages
Moral and exemplary damages may be awarded without proof ofpecuniary loss. In awarding such damages, the court shall take intoaccount the circumstances obtaining in the case and assess damagesaccording to its discretion.To warrant the award of damages, it must beshown that the person to whom these are awarded has sustained injury.He must likewise establish sufficient data upon which the court canproperly base its estimate of the amount of damages. Statements offacts should establish such data rather than mere conclusions oropinions of witnesses. Thus, for moral damages to be awarded, it isessential that the claimant must have satisfactorily proved during thetrial the existence of the factual basis of the damages and its causalconnection with the adverse party’s acts. If the court has no proof orevidence upon which the claim for moral damages could be based, suchindemnity could not be outrightly awarded. The same holds true withrespect to the award of exemplary damages where it must be shownthat the party acted in a wanton, oppressive or malevolent manner. 13. Rule that moral damages cannot be recovered from person who filed a complaint does not apply in present case
While, as a rule, moral damages cannot be recovered from a person whohas filed a complaint against another in good faith because it is notsound policy to place a penalty on the right to litigate, the same,however, cannot apply in the present case. This is not a situation wherepetitioner’s complaint was simply found later to be based on anerroneous ground which, under settled jurisprudence, would not havebeen a reason for awarding moral and exemplary damages. Instead, thecause of action of the instant case appears to have been contrived bypetitioner himself. The factual findings of the courts a quo to the effectthat petitioner filed this case because he was the victim of fraud; that hecould not have been such a victim because he should have examinedthe jewelry in question before accepting delivery thereof, consideringhis exposure to the banking and jewelry businesses; and that he filedthe action for the nullification of the contract of sale with unclean hands,all deserve full faith and credit to support the conclusion that petitionerwas motivated more by ill will than a sincere attempt to protect hisrights in commencing suit against respondents. It must be noted thatbefore petitioner was able to convince Dr. Cruz to exchange her jewelryfor the Tanay property, petitioner took pains to thoroughly examine saidjewelry, even going to the extent of sketching their appearance. Why atthe precise moment when he was about to take physical possessionthereof he failed to exert extra efforts to check their genuinenessdespite the large consideration involved has never been explained at allby petitioner. His acts thus failed to accord with what an ordinaryprudent man would have done in the same situation.
4. ONEROUS
Gaite v. Fonacier [G.R. No. L-11827.July 31, 1961.] En Banc, Reyes JBL (J): 9 concur
Facts: Isabelo Fonacier was the owner and/or holder of 11 iron lodemineral claims (Dawahan Group), situated in Jose Panganiban,Camarines Norte.By a “Deed of Assignment” dated 29 September1952, Fonacier constituted and appointed Fernando A. Gaite as his trueand lawful attorney-in-fact to enter into a contract with any individual orjuridical person for the exploration and development of the miningclaims on a royalty basis of not less than P0.50 per ton of ore that mightbe extracted therefrom. On 19 March 1954, Gaite in turn executed ageneral assignment conveying the development and exploitation of saidmining claims unto the Larap Iron Mines, owned solely by him.Thereafter Gaite embarked upon the development and exploitation ofthe mining claims, opening and paving roads within and outside theirboundaries, making other improvements and installing facilities thereinfor use in the development of the mines, and in time extractedtherefrom what he claimed and estimated to be approximately 24,000metric tons of iron ore.
For some reason or another, Isabelo Fonacier decided to revoke theauthority granted by him to Gaite, and Gaite assented thereto subject tocertain conditions. As a result, a document entitled “Revocation ofPower of Attorney and Contract” was